Commenting on today’s labour market statistics, which showed that the number of people in work increased by 55,000 in the three months to April, Michael Martins, Economist at the Institute of Directors, said:
“The uncertainty affecting the stock market is not apparent in the latest unemployment numbers, with British firms maintaining employment growth and continuing to shift staff from part-time to full-time work until April. Companies are hoarding labour in the same way that they did in the aftermath of the financial crisis. Rather than lay off valuable staff unnecessarily, they seem to be trying to keep calm until we get the result of the referendum on the 24th.
“Firms are increasing their number of full-time staff and raising pay (regular pay growth excluding bonuses grew quarter-on-quarter by 2.1% in real terms). One particularly positive aspect of the figures is that short-term unemployment continues to decrease, while medium-term unemployment hasn’t grown. This means that those shifting from short-term employment are going into work and not dropping out of the labour force.
“It is not all good news, however. Vacancies, a leading indicator, decreased by 0.9% in the services sector, which makes up four fifths of the UK’s economy. Areas where vacancies grew tend to be either very flexible, like professional services, which easily shed labour in response to economic shocks, or more volatile like accommodation and food services and arts and entertainment, where firms face smaller profit margins and are usually the first to feel the pinch of a downturn.”